The Computershare Ltd (ASX: CPU) share price will be on watch today following the after-hours release of its half year results on Tuesday.
How did Computershare perform in the first half?
Computershare had a very difficult six months due to the impact that record low interest rates had on its margin income.
For the six months ended 31 December, the company reported a 3.2% decline in management revenue to $1.1 billion and a 52.4% tumble in margin income to $55.2 million.
This ultimately led to the company’s management net profit after tax falling 25% to $117.8 million and its earnings per share falling 24.8% to 21.8 cents per share.
Despite this sizeable decline in earnings, the Computershare board has maintained its fully franked interim dividend at 23 cents per share.
How does this compare to expectations?
Although this was a weak result in comparison to the prior corresponding period, it was actually ahead of management’s guidance. This bodes well for the Computershare share price today.
It was also ahead of what analysts at Morgans were expecting. They were forecasting a 33% decline in management net profit after tax to $106 million. The broker also pencilled in a 15 cents per share dividend.
Outlook
The company is expecting a stronger second half performance, with management earnings per share forecast to come in at 30 cents for the half.
This is expected to lead to full year management earnings per share of 51.8 cents in constant currency, which will be down 8% year on year.
Computershare’s CEO, Stuart Irving, commented: “I am pleased to report Computershare’s operating business is performing ahead of plan. Although record low interest rates have impacted margin income, earnings for the half are ahead of guidance. Our operating performance supports a positive 2H outlook.”
“The 1H operating performance supports upgrading full-year earnings guidance. We now expect EBIT (excluding margin income) to be up around 14% for FY21 (previous guidance was around 10%). Management EPS is expected to be down around 8% (previously down around 11%) with margin income revenues expected to be approximately $105m this year,” he added.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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